New home registrations down 29% in London

A total of 41,222 new homes were registered by NHBC in Q2 throughout the UK, according to NHBC’s latest new home registration statistics. Overall, this represents a 1% increase on the same period last year, making it the strongest quarter since 2007.

However, a closer look at the figures reveals some stark contrasts. Half of the 12 regions showed an increase in registrations during Q2, with areas such as the South East (+37%) and the North East (+34%) surging ahead; however, the other half reported a decline in numbers, with some areas such as Wales (-30%) and London (-29%) seeing a dramatic decline.

London’s sharp decline could indicate a move towards family homes. Ninety per cent of London’s new builds are flats, and registrations for detached houses surged 30%. “Housebuilders are focussing on delivering conventional housing outside London,” said Neil Jefferson, Business Development Director for NHBC.

31,753 new homes were registered in the private sector, a 6% increase on the 30,086 a year ago. The public and affordable sector was down 13% with 9,469 new homes registered compared to 10,845 in Q2 2015.

NHBC Chief Executive Mike Quinton said, “Our latest statistics show that the industry continues to consolidate on the strong growth in registrations seen over recent years. These registrations reflect continued industry confidence in the run-up to the EU Referendum at the end of June. Indeed, this period was the strongest quarter since Q4 2007, albeit still some way off levels seen over a decade ago.”

Since then, of course, a vote to leave the EU shocked the financial world. However, according the team at NHBC, it will be a while before we can properly gauge what effect this will have on the housebuilding industry. “It’s very early days,” said John Stewart, Director of Economic Affairs at NHBC. “We had a short period of considerable uncertainty. It’s important to remember that the referendum was held in the troth of the summer, which is always an odd period.

“Many were stunned, we all held our breath for a few days, then life carried on… In the last three weeks or so things seem to have bounced back. Over the last three weeks reservations are on a level with a year ago, which was a strong period.”

The slow growth in London is a different story from Brexit: the threat of a mansion tax; the imposition of higher rates of stamp duty; and an additional rate for investors and second home buyers all dampened market sentiment before the referendum was held.

However, other factors are buoying the market outside London. “A key factor has been help to buy,” said Stewart. “That has been a strong success. In the few weeks since Brexit, the market has been buoyed by this. The one exception is London zones 1 and 2.”

However, it the NHBC said it is dangerous to judge based on figures from a single quarter. “Beyond zones 1 and 2, after an immediate hiatus demand has returned and remained stable,” said Stewart, adding that the housebuilders they have spoken to are cautiously optimistic. “The evidence on the ground is housebuilders are carrying on,” he said.